Chapter 3: International Competitiveness, Productivity and Quality
3.3 THE MEANING OF PRODUCTIVITY
Pg 86-89
By Slytherin House
Productivity refers to the amount of work that is accomplished in a unit of time using the
factors of production. The factors of production are land, labour, capital, technology and
entrepreneurship.
Businesses are interested in being productive and you can sometimes increase
productivity by making relatively simple changes such as revising the way employees
work on an assembly line to increase the number products they can finish in an hour. At
other times, an increase in productivity requires the investment of significant amounts of
capital such as when a factory installs new technology that increases automation on the
assembly line.
Business Purpose and Goals
Essentially and foremost the key goal in any business, company, or corporation is to
make profit. With that said, what is the aim of a business? Usually a company’s aim is
stated in their mission statement. An example of a mission statement is the Thomson
Corporation’s “to…empower our people to help customers become more successful by
providing them with the indispensable information, insight, and solutions”.
Also, two common goals of a business are to fulfill a need or to solve a problem.
Achieving goals and targets requires organizations to be productive. To be more
productive, an individual, department, or business must determine what it would take to
do more, produce more, or reduce more. Action on these items will increase efficiency
and productivity, which will aid in the achievement of the company’s overall goals.
For a company, productivity measures the relationship between “inputs” and “outputs”,
or how well a company uses the resources it has (meaning people, machines,
production lines, parts, supplies, or raw materials) to perform more profitable or more
competitively. Such measures can be adapted to any kind of organization.
Factors Influencing a Country’s Productivity
Many factors affect a country’s productivity
Efficient use of human and physical resources
Costs associated with labour (for example, wages and salaries, benefits,
workers’ safety and insurance costs, payroll administrator)
Accessibility and quantity of a country’s usable nature resources
Quality and availability of a nation’s technology
Quality of education and of government services
Quality of business leadership and strategy
General work ethic and healthy lifestyle
Efficiency of plants and of organizational structures
Size of both domestic and international markets for a country’s products and
services
Amount of support given to research and development
When Henry Ford introduced the assembly line in the early part of the twentieth century,
it became possible to mass-produce automobiles, making them affordable for the
average family. In a country whose business cannot afford to install this new
technology, the productivity cannot match that of countries with the new technology. A
country’s standard of living and quality of life are determined by its productivity.
Maintaining efficiency and high productivity is an ongoing pursuit, as you can see from
the examples of the Ford assembly line and the General Motors assembly line shown in
the early 2000s.